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LaSalle Hotel Properties Reports Third Quarter 2012 Results

This press release, together with other statements and information publicly disseminated by the Company, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe the Company's future plans, strategies and expectations, are generally identifiable by use of the words “will,” "believe," "expect," "intend," "anticipate," "estimate," "project" or similar expressions. Forward-looking statements in this press release include, among others, statements about outlook for RevPAR, hotel EBITDA margin, adjusted FFO, adjusted EBITDA and derivations thereof and the terms and the renovation plans and future expectations for the Park Central Hotel. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond the Company's control and which could materially affect actual results, performances or achievements. Factors that may cause actual results to differ materially from current expectations include, but are not limited to, (i) the Company's dependence on third-party managers of its hotels, including its inability to implement strategic business decisions directly, (ii) risks associated with the hotel industry, including competition, increases in wages, energy costs and other operating costs, actual or threatened terrorist attacks, downturns in general and local economic conditions and cancellation of or delays in the completion of anticipated demand generators, (iii) the availability and terms of financing and capital and the general volatility of securities markets, (iv) risks associated with the real estate industry, including environmental contamination and costs of complying with the Americans with Disabilities Act and similar laws, (v) interest rate increases, (vi) the possible failure of the Company to qualify as a REIT and the risk of changes in laws affecting REITs, (vii) the possibility of uninsured losses, (viii) risks associated with redevelopment and repositioning projects, including delays and cost overruns and (ix) the risk factors discussed in the Company's Annual Report on Form 10-K as updated in its Quarterly Reports.Accordingly, there is no assurance that the Company's expectations will be realized.Except as otherwise required by the federal securities laws, the Company disclaims any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Consolidated Statements of Operations and Comprehensive Income - Continued

(in thousands, except share data)

(unaudited)

For the three months ended

For the nine months ended

September 30,

September 30,

2012

2011

2012

2011

Earnings per Common Share - Basic:

Net income attributable to common shareholders before discontinued operations and excluding amounts attributable to unvested restricted shares

$

0.31

$

0.17

$

0.41

$

0.15

Discontinued operations

0.00

0.01

0.00

0.00

Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares

$

0.31

$

0.18

$

0.41

$

0.15

Earnings per Common Share - Diluted:

Net income attributable to common shareholders before discontinued operations and excluding amounts attributable to unvested restricted shares

$

0.31

$

0.17

$

0.41

$

0.15

Discontinued operations

0.00

0.01

0.00

0.00

Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares

$

0.31

$

0.18

$

0.41

$

0.15

Weighted average number of common shares outstanding:

Basic

85,876,584

84,640,196

85,278,331

80,392,686

Diluted

86,056,957

84,752,112

85,449,543

80,559,299

Comprehensive Income:

Net income

$

30,789

$

22,321

$

57,390

$

35,654

Other comprehensive loss:

Unrealized loss on interest rate derivative instruments

(3,839

)

0

(8,534

)

0

Comprehensive income

26,950

22,321

48,856

35,654

Noncontrolling interests:

Redeemable noncontrolling interest in loss of consolidated entity

0

0

0

2

Noncontrolling interests of common units in Operating Partnership

(103

)

0

(195

)

0

Comprehensive (income) loss attributable to noncontrolling interests

(103

)

0

(195

)

2

Comprehensive income attributable to the Company

$

26,847

$

22,321

$

48,661

$

35,656

LASALLE HOTEL PROPERTIES

FFO and EBITDA

(in thousands, except share/unit data)

(unaudited)

For the three months ended

For the nine months ended

September 30,

September 30,

2012

2011

2012

2011

Net income attributable to common shareholders

$

26,507

$

14,919

$

35,182

$

12,375

Depreciation

31,336

27,644

92,483

83,194

Amortization of deferred lease costs

97

69

271

225

Noncontrolling interests:

Redeemable noncontrolling interest in consolidated entity

0

0

0

(2

)

Noncontrolling interests of common units in Operating Partnership

116

0

224

0

Less: Net gain on sale of property

0

(760

)

0

(760

)

FFO

$

58,056

$

41,872

$

128,160

$

95,032

Management transition and severance costs

614

0

1,540

579

Preferred share issuance costs

0

0

4,417

731

Acquisition transaction costs

156

153

4,057

574

Tax adjustment related to disposition

0

244

0

244

Non-cash ground rent

114

116

342

232

Mezzanine loan discount amortization

(491

)

0

(491

)

0

Adjusted FFO

$

58,449

$

42,385

$

138,025

$

97,392

Weighted Average number of common shares and units outstanding:

Basic

86,172,884

84,640,196

85,574,631

80,392,686

Diluted

86,353,257

84,752,112

85,745,843

80,559,299

FFO per diluted share/unit

$

0.67

$

0.49

$

1.49

$

1.18

Adjusted FFO per diluted share/unit

$

0.68

$

0.50

$

1.61

$

1.21

For the three months ended

For the nine months ended

September 30,

September 30,

2012

2011

2012

2011

Net income attributable to common shareholders

$

26,507

$

14,919

$

35,182

$

12,375

Interest expense

14,110

9,856

38,391

29,566

Income tax expense (1)

4,943

3,369

6,920

5,782

Depreciation and amortization

31,480

27,765

92,911

83,572

Noncontrolling interests:

Redeemable noncontrolling interest in consolidated entity

0

0

0

(2

)

Noncontrolling interests of common units in Operating Partnership

116

0

224

0

Distributions to preferred shareholders

4,166

7,402

17,567

22,550

EBITDA

$

81,322

$

63,311

$

191,195

$

153,843

Management transition and severance costs

614

0

1,540

579

Preferred share issuance costs

0

0

4,417

731

Acquisition transaction costs

156

153

4,057

574

Net gain on sale of properties

0

(760

)

0

(760

)

Non-cash ground rent

114

116

342

232

Mezzanine loan discount amortization

(491

)

0

(491

)

0

Adjusted EBITDA

$

81,715

$

62,820

$

201,060

$

155,199

Corporate expense

6,190

5,128

17,004

14,968

Interest and other income

(3,221

)

(1,172

)

(5,686

)

(3,650

)

Hotel level adjustments, net

(246

)

11,186

(2,011

)

26,712

Hotel EBITDA

$

84,438

$

77,962

$

210,367

$

193,229

(1) Includes amounts from discontinued operations.

With respect to Hotel EBITDA, the Company believes that excluding the effect of corporate-level expenses, non-cash items, and the portion of these items related to unconsolidated entities, provides a more complete understanding of the operating results over which individual hotels and operators have direct control. We believe property-level results provide investors with supplemental information on the ongoing operational performance of our hotels and effectiveness of the third-party management companies operating our business on a property-level basis.

Hotel EBITDA includes all properties owned as of September 30, 2012 for the Company's period of ownership in 2012 and the comparable period in 2011. Exceptions: Hotel EBITDA excludes March period of ownership for Hotel Palomar, Washington, DC. Hotel EBITDA for all stated periods excludes any properties the Company has sold.

LASALLE HOTEL PROPERTIES

Hotel Operational Data

Schedule of Property Level Results

(in thousands)

(unaudited)

For the three months ended

For the nine months ended

September 30,

September 30,

2012

2011

2012

2011

Revenues:

Room

$

167,437

$

158,797

$

447,576

$

424,451

Food and beverage

52,896

55,336

155,797

157,860

Other

15,181

14,821

41,156

39,280

Total hotel revenues

235,514

228,954

644,529

621,591

Expenses:

Room

39,663

38,178

111,615

108,117

Food and beverage

37,748

38,925

111,077

112,203

Other direct

5,581

5,973

15,692

16,209

General and administrative

17,035

17,215

49,530

48,668

Sales and marketing

14,241

14,092

42,544

40,808

Management fees

8,360

7,925

21,390

21,037

Property operations and maintenance

7,625

7,869

22,947

22,630

Energy and utilities

6,312

6,653

17,870

18,492

Property taxes

10,480

10,539

29,977

29,545

Other fixed expenses

4,031

3,623

11,520

10,653

Total hotel expenses

151,076

150,992

434,162

428,362

Hotel EBITDA

$

84,438

$

77,962

$

210,367

$

193,229

Note:

This schedule includes operating data for all properties owned as of September 30, 2012 for the Company's period of ownership in 2012 and the comparable period in 2011. Exceptions: The schedule excludes the March period of ownership for Hotel Palomar, Washington, DC. All stated periods exclude any properties the Company has sold. Hotel EBITDA margin is calculated by dividing hotel EBITDA for the period by the total hotel revenues for the period.

LASALLE HOTEL PROPERTIES

Statistical Data for the Hotels

(unaudited)

For the three months ended

For the nine months ended

September 30,

September 30,

2012

2011

2012

2011

Total Portfolio

Occupancy

86.7

%

85.2

%

80.8

%

80.3

%

Increase

1.7

%

0.6

%

ADR

$

205.75

$

199.21

$

200.87

$

192.69

Increase

3.3

%

4.2

%

RevPAR

$

178.43

$

169.80

$

162.26

$

154.80

Increase

5.1

%

4.8

%

Note:

This schedule includes operating data for all properties owned as of September 30, 2012 for the Company's period of ownership in 2012 and the comparable period in 2011. All stated periods exclude any properties the Company has sold.

Non-GAAP Financial Measures

FFO, EBITDA and Hotel EBITDA

The Company considers the non-GAAP measures of FFO (including FFO per share/unit), EBITDA and hotel EBITDA to be key supplemental measures of the Company's performance and should be considered along with, but not as alternatives to, net income or loss as a measure of the Company's operating performance. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most real estate industry investors consider FFO, EBITDA and hotel EBITDA to be helpful in evaluating a real estate company's operations.

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